Finance Minister Brian Lenihan said the Government had decided not to reduce social welfare rates, but warned that they may need to be reviewed in future years.
But the Government will not be paying the December bonus paid in previous years this year, while from May new applicants for the jobseekers allowance who are under 20 will have their payments halved to around €100 a week, 'to incentivise' participation in training programmes.
Mr Lenihan confirmed that child benefit would be will be means tested or taxed in the Budget next year. Meanwhile, the early childcare supplement will be halved from May 1 and abolished at the end of the year. This will be replaced by a free early childcare and education supplement.
Brian Lenihan told the Dáil that part of the problems in the public finances arose from structural problems which had to be addressed. He said spending was too high, and revenue too low. He also said the Government had agreed with the EU that five years was the right amount of time to address the problems.
The Minister said the Government was targeting borrowing of 10.75% of economic output this year. He said public spending had already been cut by €1.8 billion this year, and this Budget would make another €1.5 billion in spending cuts and raise €1.8 billion from tax revenue.
He said the tax system had been over reliant on construction and now must be restructured. Mr Lenihan signalled further tax measures totalling €1.75 billion next year and €1.5 billion in 2011.
He said the options included the taxation of child benefits, a carbon tax and a form of property tax.
Mr Lenihan said it was necessary to control public sector numbers. He announced a new scheme where public service workers over 50 can retire without affecting the pension benefits they had so far built up. 10% of their lump sum will be payable immediately with the rest paid at normal retirement age subject to current tax law. Workers taking up this scheme will not be replaced.
But he said the continued availability of the scheme would be reviewed next year, and added that the Commission on Taxation was looking at pension taxes, including the treatment of lump sums.
